|Re:||Prescribing the Authorized Rate of Return for Interstate Services for Local Exchange Carriers and Policy and Rules Concerning Rates for Dominant Carriers, CC Docket 98-166|
I dissent from today's Notice of Proposed Rulemaking initiating a rate of return prescription proceeding for local exchange carriers (LECs) still subject to rate of return regulation and proposing corresponding changes to the price cap regulatory regime. On several occasions, I have expressed my continued concern with the Commission's micromanagement of LECs in general. The Commission's authority to prescribe new rates for the LECs still classified as dominant carriers and to propose changes to the low-end adjustment for price cap LECs is a mere vestige of outdated rate of return regulation. In today's increasingly competitive environment, the Commission should be focusing its efforts on transitioning to a more competitive environment for both rate of return and price cap LECs.
For example, I note that the Commission has initiated a proceeding to modify the access rules of the rate of return LECs in some minor ways to conform to the price cap rules; I supported that proceeding. In contrast, I believe that today's proceeding merely perpetuates an outmoded form of regulation. The Commission's resources would be better spent pursuing the subsequent phases alluded to in our earlier proceeding that would afford additional pricing flexibility to these carriers and propose alternative regulatory regimes that would offer additional incentives for rate of return LECs to become more efficient.
Moreover, the amount of detailed information and regulatory scrutiny required under our current price cap rules is inordinate and should be reduced. This seemingly anachronistic regulatory regime should be reformed to provide further pricing flexibility, eliminating altogether such relics as the low-end adjustment. I continue to await anxiously the opportunity to address more fully these issues and the circumstances under which dominant LECs should be accorded a simpler form of price cap regulation.
I am becoming increasingly convinced that the current regulatory mechanisms -- and certainly the level of detail -- are no longer necessary in today's increasingly competitive environment. We must develop a more forward-looking blueprint to guide the transition from regulation to competition. As I have stated previously, regulation is merely designed, to the extent possible, to replicate a competitive marketplace, but any form of regulation is an imperfect surrogate for full-fledged competition. I believe the Commission should be at least considering even further deregulation so that these cumbersome regulations are unnecessary.